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Wednesday, October 6, 2010

Interesting that business news writers didn't take Japan's recent brinksmanship over the Chinese fishing boat and Japanese Coast Guard collision in the waters around disputed islands northeast of Taiwan seriously. One example: the Wall Street Journal blog post with the wry title "Aye Aye Cap'n."

I was in Beijing late last month, shortly after news broke that China had passed Japan as the world’s second-largest economy.

The official line in the Chinese media: No gloating over passing China’s longtime rival. For instance, when Premier Wen Jiabao met with Japanese foreign minister Katsuya Okada in Beijing on August 29, leaders about ways the two countries could work together. Wen talked about enhancing bilateral cooperation and Okada was upbeat, too.

“During the meeting on Sunday, Okada said the future of China and Japan was becoming increasingly integrated,” the official English-language China Daily reported. ” ‘Not only do Japanese companies position it (China) as a manufacturing base, more importantly, they regard it as a very important consumer market,’ Okada said.”

I have resisted making a big deal about this month’s escalating dispute between China and Japan over the East China Sea, because it is hard to envision a scenario where it spirals out of control beyond nationalist chest-thumping and diplomatic brinkmanship.

At this point, this row is still, for me at least, safely at a stage where we can laugh at it, and you should too, by watching this brilliant animated confection from Taiwan’s Next Media (hat tip to Danwei, which beat me to the title “Ninja vs. Panda”):

Epstein notes this round of political theater is (at least temporarily) not good for Japanese interests in China, but great for military contractors:

Japan and China had agreed in principle in 2008 to jointly develop the gas fields in the area, a compromise that looks increasingly fragile this month. Premier Wen Jiabao’s remarks in New York Tuesday night — that “the Japanese side bears full responsibility for the situation, and it will bear all consequences” — don’t bode well for a climbdown by either side anytime soon.

The rhetorical and literal at-sea broadsides follow a summer of increasing tensions in the other seas around China, something I have noted is welcome news for Pentagon contractors like Northrup Grumman, Lockheed Martin and Raytheon.

Epstein's conclusion looks like it was spot on.

Kyodoreports that U.S. military contractors, represented by Washington, are seizing this opportunity. A possible winner: Drone manufacturer Northrup Grumman:

The U.S. government has also sounded out the Japanese government over acquisition possibilities through multiple channels, they added.

The Global Hawk would cost about $50 million (roughly 4.15 billion yen), including equipment, bringing the sum for three aircraft to more than 12 billion yen. The ministry estimates it would need tens of billions of yen additionally to build ground facilities with command functions, according to the sources.

The "China Threat" lulled and Tokyo-Beijing relations seemed to blossom when the heads of state met on June 1: Prime Minister Yukio Hatoyama greets Chinese Premier Wen Jiabao in Tokyo to begin bilateral negotiations on a treaty over gas fields in the East China Sea. One of the Japanese participants in the meeting said Wen didn't directly address the maritime issues but expressed interest in establishing a crisis-management mechanism to prevent incidents that could trigger bilateral friction, including accidental contact involving military ships. Text: Japan Times: "Wen open to treaty to end gas field row But premier yet to commit to punishment for Pyongyang"'. (Photo: Kyodo)